By Islam BarakaDefinitions
In plain terms
Starting at 100, a 5% return moves the index to 105; a later 10% loss moves it to 94.5.
Technical
Each level equals the prior level multiplied by one plus the periodic return, subject to return variant, calendar, missing-data, and rounding policies.
Scope
It is a normalized measurement series, not necessarily a governed market benchmark.
Formula
I_t = I_(t-1) * (1 + r_t)I_t=I_{t-1}(1+r_t)| Symbol | Meaning | Unit |
|---|---|---|
I_(t-1) | previous return-index level | index points |
r_t | period return | decimal return |
Output unit: index points
Examples
- A governed calculation records return index with its exact basis, effective time, source, and units.
Common misconceptions
- Return Index does not have one universal treatment without the applicable methodology, event terms, and data context.
Concept relationships
Prerequisites
Related
Where this concept is used
Tutorials planned
These catalogued topics use this concept, but their complete build has not shipped yet.
- D03-F04-A01 Important
- D03-F04-A02 Important
- D03-F04-A03 Important
- D03-F04-A04 Important
Evidence and governance
- S&P Dow Jones Indices Index Mathematics Methodology S&P Dow Jones Indices · first party methodology
Supports: preferred label, short definition, technical definition, formula
Limits: Authoritative for the provider's indices; conventions are not universal defaults for every index or security-level return series.
- Fintech Builder Glossary Definition Contract The Fintech Builder · internal governed contract
Supports: variant distinction
Limits: Defines governed platform behavior rather than claiming these policies are universally prescribed by external McClellan methodology.
- Reviewed by
- Islam Baraka
- Last reviewed
- 2026-07-27
- Next review
- 2027-07-27
- Record status
- published